Gold Coin Buyers Consider New Canadian Coins

February 10, 2010 – Recognizing the appeal of physical gold coin purchases, several Canadian investment companies are offering new funds that they hope will attract investors who want to hold the gold they purchase. By addressing some of the typical arguments over mutual funds and exchange-traded funds, the companies are hoping to begin successful ventures in the precious metal.

Claymore Gold Bullion Trust, previously a closed-end mutual fund, recently converted to an open-end ETF. This change is desirable, as pointed out by Nathan Slaughter of The ETF Authority. “Closed-end funds rarely trade near their net asset value (NAV); whereas ETFs tend to trade very close to their NAV…In fact, unlike ETFs, where the fund’s current holdings are public knowledge, closed-end funds, like open-end mutual funds, typically do not disclose their exact portfolio holdings on a timely basis.” The hope of a change like this is likely that the new fund will create greater transparency and draw people who want physical gold and are drawn by a low 0.5% management fee.

BMG Management Group Inc is also launching its BMG Gold Bullion Fund this week. This open-ended mutual fund only invests in physical gold. Nick Barisheff, president and CEO of BMG said, “Core holdings of a portfolio should start with fully allocated and insured physical bullion. There should be no derivatives or hedges of any kind, nor should there be any third-party claim on the bullion, counterparty risks or dependency on portfolio managers for trading strategies." The company is offering a 2.25% management fee and a low minimum investment of $1,000.

For most gold coin buyers, holding the physical gold they purchase is preferable to leaving it in a mutual fund or other type of fund. The implied benefits of owning physical gold is the possession the metal, and these types of funds generally do not meet that requirement.

Purchasing through gold exchanges, for example, can be less expensive than paying management fees and investors can take delivery of the purchased product. Those who want to have their holdings stored can utilize the exchange’s depositories. Amid concerns over actual levels of gold holdings by mutual funds and business practices of some of these funds, investors may take a look at these new investment options, but prefer the benefits of working with a gold exchange. 

Kevin Johnson

Senior Staff Writer –

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